For the past three years Barry Diller has been a force that loomed large over any company that controlled USA and Sci Fi, the cable channels his company once owned. Thanks to certain rights that he has retained even as the channels have changed hands, Mr. Diller has long had the ability to be an obstacle to any decision made by those running the cable networks.

Last week that all changed. Mr. Diller’s IAC/InterActiveCorp agreed to sell its 5.4 percent stake in Vivendi Universal Entertainment, which held the channels, to NBC Universal for $3.4 billion. That gave NBCU full control of VUE and ended Mr. Diller’s involvement.

The transaction comes after several months of contract wrangling by IAC, French conglomerate Vivendi Universal and NBCU and resolves several legal and financial issues that have hovered over the three companies since before NBCU was created in May 2004.

Perhaps the most significant outcome of the deal is that by giving up his stake in VUE, Mr. Diller effectively ended his status as a traditional media titan. IAC no longer owns traditional media assets and is now purely an Internet company with online assets such as dating service Match.com and Web-based travel service Expedia. IAC is presently planning to spin off its travel-related assets into a separate company amid shareholder pressure.

Mr. Diller during a conference call last week said the sale of the VUE stake “takes away anything that could be considered a drag” on IAC and simplifies things ahead of the split.

The deal also settles years of litigation between the IAC and Vivendi on various matters, including whether Vivendi owed IAC $620 million to cover a tax obligation. It also resolves an obligation by Vivendi to pay up to $520 million to NBCU parent General Electric should NBCU sell any of its theme parks during the next three years.

NBCU is 80 percent controlled by GE, while the remaining 20 percent is owned by Vivendi. VUE was created in 2002 when Vivendi’s Universal Studios joined forces with IAC’s entertainment assets. Vivendi controlled VUE until VUE combined with NBC last year.

As part of the deal, NBCU is getting 56.6 million IAC class B common shares, which have a market value of $1.4 billion, and cash, including $865 million in proceeds from the sale of U.S. Treasury bonds that secured IAC’s stake in VUE.

Vivendi said it would receive a total cash payment of $235 million and book a one-time gain of $244 million, while IAC expected to record a $330 million gain related to the transaction. In addition, IAC said it would receive $100 million in advertising on NBCU’s cable and broadcast networks over the next three years.

In addition, the transaction changes some of the terms of the agreement that brought VUE and NBC together last year. Vivendi will now have until January 2007- a one-year extension-to decide whether it wants to exercise an option to sell its 20 percent stake in NBCU, while GE now has until May 2010 to decide whether it wants to buy Vivendi’s stake in NBCU-also a one-year extension.

The decisions to extend the deadlines for both companies reflect Vivendi’s desire to hold on to the NBCU stake and GE’s desire not to have to put cash toward buying out the stake.